Friday, October 10, 2014

Are People Still Leaving the Labor Force in Discouragement and Despair? The FACTS HERE!

Let's put this myth of unemployed people "giving up" and leaving the labor force in discouragement and despair to rest once and for all. (Updated June 2015)

The # of officially unemployed was 16 million in late 2009, and now about 8.3 million people are unemployed (and the population is much greater). The unemployment rate has fallen from a peak of 10% in late 2009 to June 2015's rate of 539%. But the Republicans keep claiming that the reason the unemployment rate is falling is due to the fallling labor force participation rate, which they attribute to people just "giving up" in despair and misery of finding a job. But that is simply not true!

Here's the truth:

The number of people leaving the labor force, the number of people who have given up their search for work (the blue line at the bottom of the graph below) in discouragement, despair, and misery is declining rapidly, and that number is greatly eclipsed by the number of people entering the labor force (the yellow line at the top) - and by the number of people who were previously employed who are leaving the labor force (the green line in the middle).

First of all, we always have MILLIONS.. yes, MILLIONS.. of people leaving and entering the labor force every month. The Bureau of Labor Statistics produces something called the Flows reports that tell us how many people moved from employment to unemployment, employment to "not in the labor force", unemployment to "not in the labor force", and from out of the labor force to back into the labor force every month. ("Not in the labor force" refers to people 16 year of age and older who are not working nor looking for work. People who are active military are not counted nor are people counted who are institutionalized.)

Since they've kept track of these "flows", starting in 1991, we've never had fewer than 1.4 million people a monthon averageDROP OUT from unemployment to "not in the labor force". And we've never had fewer than 4.7million people a month ENTERING the labor force.

For every ONE person "dropping out" of the labor force...

Right now, for every ONE person "dropping out" of the labor force after unemployment, we have THREE people entering the labor force and either starting work or starting to look for work!

And for every ONE person "dropping out" of the labor force after unemployment, we have almost TWO people leaving the labor force after being employed-- Think: RETIREMENT!

The Labor Force Participation Rate is NOT the Unemployment Rate, not now, not ever, never has been.Let's remember something else: The Labor Force Participation Rate, the percentage of people in the civilian non-institutional population 16+ who are either working or looking for work, is NOT the unemployment rate. Anybody who thinks it is is a blithering fool. YES, the economy impacts the Labor Force Participation Rate.. but it is impacted more strongly by demographic trends:

Baby Boomers graduating from school and entering the labor force in the 1970's and 1980's.

Women entering the labor force in the 1970's and 1980's.

And now, Baby Boomers retiring..

and the Baby Bust generation (born in the late 1960's and 1970's hitting the prime working ages).

I have more graphs to create and post: The actual ratio of people who leave the labor force after unemployment over the past two decades; the actual ratio of people who leave the labor force after employment compared to the number of people who leave the labor force after unemployment (the labor force dropouts); the actual ratio of people who are entering the labor force comapared to the number of labor force dropouts.

I'll will probably link to a separate post when I get those graphs finished.

Potential Questions:

"This can't be true. You Obama-lover, you must be making this up. Because if this were true, the number of people in the labor force would not be going down."

Well... The number of people in the labor force is actually going up. Check it out HERE.

"But. but...but ... Labor Force Participation Rate! Oh, and as long as we are at it-- Benghazi!"

Look at that green line above.. The number of people leaving the work force after being employed. Notice that it again is going up. That's the major reason for the labor force participation rate going down... Employed people are quitting their jobs and leaving the work force. People in this great country of ours are STILL able to retire at some point. And that's a good thing!

Definitions:

The civilian non-institutional population 16+: This is the basis for all employment and unemployment numbers. It includes everyone living in the United States who is:

16 or older

Not active military

Not institutionalized

There is no top age limit to be considered part of the civilian non-institutional population 16+.

Therefore, retired people, 16 and 17 year old kids in high school, kids in college, people raising and taking care of their families, 85 year old grandmas as long as they are living at home, people who are disabled and not working, are all part of the civilian non-institutional population 16+, along with all people who are employed or actively looking for work.

"Not in the labor force":People in the civilian non-institutional population 16+ who are not employed and are NOT actively looking for work.

Labor Force Dropouts: I count people who were unemployed (actively looking for work) one month and "not in the labor force" the next as the Labor Force Dropouts.The Labor Force Participation Rate: The percentage of people in the civilian non-institutional population 16+ who are either working or looking for work.

2 comments:

CNN reports today: But there's a dark side to this recovery: Millions of people are still unemployed or underemployed... A close look at three types of frustrated job seekers underscores why the American economy is still struggling..

Considering the failure of the Republicans to work with the Democrats to get people back to work and considering the depth of this recession, the worst that any of us under age 80 have ever seen, it is not surprising that it is taking us so long to recover, and that the job market is still not as robust as it was in, say, 1999. I wrote this reply to the article at CNN:

"This was a particularly nasty recession, the worst that any of us under the age of 80 have ever seen or lived through. It's not surprising that it is taking so long for things to return to "normal", if they ever will. And the labor market in 2007, before everything collapsed was NEVER as good as it was in the late 1990's.. I know many people, particularly older people, who were struggling in their attempts to find full-time permanent employment in 2005-2007. The percentage of involuntary part-time workers in late 2000 was 2.3% of the labor force but the percentage of involuntary part-time workers in late 2007 was 2.9%. And that was with massive war spending throughout most of the 2000's along with all of that "trickle down" stuff.

The percentage of involuntary part-time workers now is 4.6%. Since the "trough" of the recession, however, in late 2009, we have 8.7 million MORE people working full-time and actually 120,000 FEWER people working part-time. We're not adding part-time workers, as almost all of the gains in workers have been in full-time workers.. but we just had so many... Over 9 million involuntary part-time workers at peak.

We can only imagine what all of these numbers would look like now if the Republicans had actually worked with the Democrats and not tried to regain power on the backs of the struggling American people.. as well as using the unemployment numbers as attempts to rolll back generations of environmental regulations (not to mention the 55 or so attempts to get rid of the ACA.)"

I appreciate intelligent comments and questions, including those that are at odds with anything posted here. I have elected not to screen comments before they are published; however, any comments that are in any way insulting, caustic, or intentionally inflammatory will be deleted without notice. Spam will also be immediately deleted.